BlackRock launches new Global Impact Fund to advance UN sustainable development goals
BlackRock has launched a new Global Impact Fund, focusing on a high-conviction active equity impact strategy to advance United Nations Sustainable Development Goals (SDGs).
The new fund gives investors the opportunity to direct their investments toward companies helping to address major world challenges. The addition of the impact strategy forms part of BlackRock’s continued efforts to expand its sustainable investment platform as it delivers against its commitment to make sustainability its standard for investing.
The fund’s impact is achieved by investing in companies which contribute to the advancement of the United Nations SDGs and targets. The portfolio is comprised of companies that map back to the firm’s proprietary impact themes including increasing access to quality education and affordable housing, advancing healthcare innovation to help with societal challenges such as the current Covid-19 pandemic, expanding financial and digital inclusion, preventing climate change, reversing environmental degradation, and increasing efficiencies in water usage and deployment.
The fund is managed through BlackRock’s active equities impact investing team which recently formed under the leadership of Eric Rice, who joined the firm in October 2019. Rice will draw upon his 30 years of industry experience, most recently exclusively developing and managing impact strategies, and including his prior experience working for the World Bank as a development economist and as a US diplomat in Rwanda.
Rachel Lord, head of Europe, Middle East and Africa for BlackRock comments: “Eric joined BlackRock with a strong track record in developing alpha-seeking impact strategies and his expertise will lead our impact investing efforts during this challenging time and beyond. While launching the Global Impact Fund during a global pandemic is coincidental, it does highlight that the opportunity inherent in investing in companies committed to doing good is enduring, and is of increasing relevance to the world today.”
Alongside the impact goals, the fund seeks to maximise long-term total return and to outperform the MSCI All Country World Index (ACWI). To achieve the fund’s objectives, the team has set stringent impact criteria for the portfolio companies including:
• materiality – whereby a majority of revenues or business activity advances one or more of the SDGs or targets;
• additionality – defined as delivering a new technology or innovation to market, serving an underserved population, or operating in an unaddressed market; and
• measurability – in that the impact must be quantifiable.
“Impact investing is becoming more and more attractive as investors increasingly require their investment targets to advance their sustainability objectives,” says Rice, portfolio manager of the BlackRock Global Impact Fund and head of active equities impact investing at BlackRock. “Launching the fund during the Covid-19 pandemic has further highlighted the important role companies play in society. Covid-19 is one of the greatest societal challenges the world faces right now, and we see impact investing playing a meaningful role in how we overcome it. Capital from the fund will be put toward the search for alpha by investing in companies focused on medical diagnostic tools and vaccines to combat the crisis, as well as crisis mass notification systems and microloans, amongst others.”
The team intends to run a low-turnover, long-term buy and hold concentrated portfolio strategy and use active dialogue and partnership with companies to drive improvement towards impact outcomes, alongside long-term value creation. The fund is USD-denominated and available for investors located across Europe.
Impact investments are designed to generate positive, measurable impact alongside a financial return. The fund uses the World Bank’s IFC Operating Principles to ensure impact considerations are integrated throughout the investment lifecycle. Reporting plays an integral role of the investment offering where clients will receive regular updates and reports on the positive environmental or social impact that fund companies are achieving.
BlackRock’s active equities impact offering will sit alongside existing impact strategies in the fixed income and alternatives business areas. The active equities group manages USD316 billion of assets on behalf of its clients and has managed Environmental, Social and Governance (ESG) investment strategies for over four years.
The fund forms a part of BlackRock’s sustainable investing platform which manages USD107 billion in dedicated sustainable strategies, comprising of ESG outcome oriented, sustainable thematic and impact funds. Sustainable investment options may have the potential to offer clients better outcomes and is integral to the way BlackRock manages risk, constructs portfolios, designs products and engages with companies.